Just recently I have done one of the many questionnaires that you can find online. Where, based on your answers, companies categorize your procurement. Then, they offer solutions to improve your department. This time, I took notes of the questions and answers, to figure out what a great Procurement department needs to have.
So, here is the list. It is not ranked by importance or priority, just the way questions came across
What does procurement Excellence mean? What teams that consider themself as “top” have/do?
- Define and communicate the mission, vision and strategy of the Procurement Organization
- Have a Sustainability policy covering all aspects:
- human rights,
- labour practices,
- fair operating practices,
- consumer issues
- community involvement
- Ethical guidelines
- Needs anticipation
- Proactive engagement with all stakeholders
- Actively looking into industry transformations and megatrends
- Align the strategy with the business needs and adapts to changes
- Assess risk and has contingency plans
- A clear staff hiring, development and succession plan
- A segmented and differentiated Supplier Management process
- Engagement with small local businesses and start-ups as a part of Social initiatives
- Insight into department costs and budgeting of the same
- Works together with suppliers on new initiatives aiming to reduce the TCO.
- Collects feedback internally and externally about the procurement processes
- Measures effectiveness
- Has an image of value-adding and innovative function
- Helps to increase revenue by introducing new external resources
- Records and analyses stakeholders (customer and supplier) complaints
Couple of things I have noticed while doing the questionnaire and collating this list:
- Tactical procurement is nowhere mentioned. This part of procurement is digitized and mostly automatic.
- What we called “Strategic procurement” is no anymore the focus point of the best procurement teams. Tenders, bidding and negotiations are considered as part of the day-to-day activities.
- Half of the mentioned points require data. A lot of accurate data. So, if you are starting this journey, get your data collection systems in place. And properly aligned and organized for future use.
Procurement is way beyond the function of buying things. Even purchasing. But we can not be seen as a real value-adding function of the organization unless we move forward.
Here is the checklist. Tick it off and enjoy the journey to the top.